Are interest rates finally taking their bite out of the economy? Friday’s news that hiring had slowed certainly adds to the case. Markets have anticipated a slowdown and the impact of rate hikes for months now. While several economic factors have been positive, hiring stands out as one of the more significant indicators to consider. Should the economy finally be turning, embracing active investing could be one way to adapt.
U.S. employers only added 150,000 jobs in October, a drop from September’s revised 297,000. That not only counts up to half of September’s total but was the smallest gain since June. While that slowdown inherently represents bad news, which could boost the case for a recession, the hiring slowdown also boosted stock futures.
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That response marks the stock market’s belief in a possible rate cut down the line. That would provide a notable boost to the economy overall, of course. However, that outcome remains somehow unlikely with the implied probability of still having the Fed Funds rate above 4.5% even by 2025.
Either way, active investing can adapt. Whether looking for outperformance or to adjust to a recession, actively managed ETFs offer a way in. While passive ETFs have to track simple indexes that require committee meetings to adapt, active strategies can adapt even intraday. Rather than simply riding out the ups and downs in a broad equity index, active strategies can often find outperformance in both trends.
T. Rowe Price offers a suite of active ETFs for investors to consider investing in both bonds, equities, and more. That includes funds as varied as the T. Rowe Price Capital Appreciation Equity ETF (TCAF ) and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX ). For those investors looking to adapt to continued up and down market swings, active investing stands out as an option to consider.
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